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Implied volatility fell off a cliff in options on MannKind (MNKD) Wednesday after the company said a U.S. Food and Drug Administration advisory committee recommended approval of its inhaled therapy for diabetes. Option volume surged as the stock jumped by as much as 80% to $7.16.

Earlier in the week the stock slid to as low as $3.80 after one analyst forecast its shares would reach $1.00. By 2:00 p.m. ET option traders had boosted volume to 206,000 contracts representing 22% of outstanding positions on the stock.

The welcome news forced abandonment of bearish bets and demand for upside calls. Heavy selling of put options and a general reduction in downside fears for its stock allowed the uncertainty measured by implied volatility to fall. Implied volatility fell by almost half, yet still stands at a lofty 177%, maintaining fat premiums within option prices.

We should note that despite the apparent victory, the FDA does not have to follow the recommendation of the panel. One of the heaviest traded put series was at the 3.0 strike price in the April 17th expiry where bears had built up nearly 40,000 positions set to gain should shares in MannKind continue to slide. So far on Wednesday some 32,500 of those put options appear to have been sold, most at a premium of just 7-cents. On Tuesday, the 17 April ’14 3.0 puts closed out the session at a premium of 62-cents.